Article Image

IPFS News Link • Gold and Silver

How The Fed Controlled The Price Of Gold From 1982 Until 1995

• https://www.zerohedge.com by Jan Nieuwenhuijs

The ones that think gold hasn't played a significant role in economics in the past decades, might want to reconsider their assumption. Until this day gold has been pivotal in international economics—although since 1971 different phases can be identified. In today's article we will focus on the period from 1982 until 1995 with respect to U.S. monetary policy and the price of gold.

The Gold Price and Inflation Expectations

In the early 1990s it appeared that the Federal Reserve was tracking the gold price to get a sense of inflation expectations. On February 22, 1994, the Chairman of the Fed, Alan Greenspan, testified for the semiannual monetary policy report to Congress. He began by explaining that low consumer price inflation was key to long-term growth and low unemployment. From Greenspan (emphasis mine):

Lower inflation and inflation expectations reduce uncertainty in economic planning and diminish risk premiums for capital investment.

It follows that price stability, with inflation expectations essentially negligible, should be a long-run goal of macroeconomic policy.


thelibertyadvisor.com/declare